Finance minister Nirmala Sitharaman on Wednesday rapped state-run banks for lacking consumer connect and said often executives at the branch level could not communicate in the local language or provide details of government schemes.
The minister’s outbursts at an event to unveil the next phase of PSB reform plan, EASE 3.0, were triggered by customer complaints from across the country. It was a rare tongue-lashing to PSB chiefs and top executives, reminding them that they had lost ground-level touch, something that they were always known for.
“I am going to say things which won’t be music to your ears. But I am going to say it because we need to introspect. Today, when people come to meet me, there are often worries on how, at the branch level, we can be a little more friendlier,” Sitharaman said, while urging top bankers to revamp their operations and motivate staff at the branches.
The statements came amid a which bankers have attributed to overreach by agencies on alleged fraud. Sitharaman once again sought to allay fears over this issue, saying the government will protect genuine business decisions and it had already put in place several measures to shield honest bankers. But she made it clear that banks need to move ahead decisively on loan proposals.
“It has to be normal practice that those who want credit get it. Those who approach you in the branch and tell you their requirement, follow the prudential norms, but attend to them. Tell them why you want to give them (a loan), tell them why you don’t want to give. But tell them. Be responsive… I will give you easy access and I also request you to give the customer easy access and get back to being that proud public sector bank official,” the minister said during her 25-minute speech.
She listed out several areas which required immediate attention to improve performance at the branch level. For instance, she said, there was over-reliance on data from credit rating agencies and credit information bureaus and branches no longer knew their customers well. “We have got credit rating agencies and agencies that rate different banking functions and therefore talk about the customer and his (credit) worthiness. But they are not advisory, they are only an indicator of what a customer is. Was there ever a directive from either the Reserve Bank or the IBA (Indian Banks’ Association) to say that you will blindly follow the rating agencies numbers? No.” Sitharaman suggested that there should be a “judicious mix” of personal connect with the customer and data. By ignoring that connect, she said: “Your goodwill is lost, your personal connect is lost, your assessment at the bottom level is lost… forgetting branch-level connect with customers has not done us good.”
The FM also underlined the need to motivate branch staff so that lending can get a boost and government schemes can be rolled out without any hitches. “The RBI will come back and say you borrow from me at a much lower interest rate, much lower than the repo rate… I can go on meeting you but it will still not reach the customer. Motivation at the branch level (is required).”
The minister also said often branch-level staff was not even aware of government schemes, resulting in poor implementation. “General gyan on government schemes is not like before. You probably have people at branch level not even aware of those schemes that are being implemented in that branch in that particular area. Let’s please do an introspection. It cannot be that the government wants to make sure there is inclusion, it cannot be that the government wants money to reach the poor but the instrumentality that is prevailing through which the money has to go just because of want of information is not able to move forward. It cannot be like this,” she said, urging bankers to find a solution, while recognising that they may be facing a manpower crunch.