The Union Minister of State for Finance recently declared in the Rajya Sabha that a series of measures have been implemented to boost digital banking, doorstep banking services, and digital lending platforms. This article discusses these key modifications and their impact on the overall financial infrastructure.
Digital Banking: A New Realm of Convenience
Digital banking signifies the shift of traditional banking activities and program services to the online platform. It encompasses various activities that were earlier possible only within the physical premises of the bank branch. These activities include money deposits, withdrawals, transfers, checking/saving account management, applying for financial products, loan management, bill payment, and account services.
Challenges in Digital Banking Adoption
Despite the convenience it offers, adopting digital banking is not without its challenges. Internet access is a significant barrier, but it’s not the only one. There is also a need for educating users about digital banking operations and ensuring the security of their data.
Initiatives for Improving Banking Services
To address these challenges and improve banking services, several initiatives have been introduced:
EASE Reforms Agenda
Launched in January 2018 by the government and Public Sector Banks (PSBs), the EASE Reforms Agenda aims at institutionalizing clean and smart banking. The performance of each PSB is measured on over 120 objective metrics, and the goal is to drive change by promoting healthy competition among PSBs.
EASE Reforms Index
The EASE 1.0 report demonstrated considerable enhancement in PSB performance in handling Non-Performing Assets transparently. EASE 2.0 advances the foundation of EASE 1.0 and presents new reform Action Points across six themes.
EASE 3.0 to Ease 4.0
EASE 3.0 aims to increase ease of banking using technology. On the other hand, EASE 4.0 focuses on co-lending with non-banking firms, digital agriculture financing, synergies, and technological resilience for 24×7 banking.
PSBloansin59minutes.com
A contactless digital lending initiative, PSBloansin59minutes.com, uses credit bureau, income tax, and Goods and Services Tax (GST) data to provide online in-principle approval for Micro, Small, and Medium Enterprises (MSME) loans.
Trade Receivables Discounting System (TReDS) Platform
Online bill discounting for MSMEs has been facilitated through PSBs onboarding onto the TReDS platform. This system allows a company’s unpaid invoices due at a future date to be sold to a financier.
Jeevan Pramaan Initiative
This initiative enables senior citizen pensioners to update their annual life certificate online.
Doorstep Banking Services
Through Doorstep Banking Services, launched by the PSB Alliance, customers can avail major banking transaction services at their doorstep.
Current Status of Digital Banking in India
As of now, about 72% of PSBs’ financial transactions are carried out via digital channels, which is a remarkable improvement from the previous years.
The Way Forward: Embracing Advanced Technologies
The future of banking lies in embracing digital transformation. Banks need to adapt to new-age technologies like Blockchain, Artificial Intelligence, Machine Learning, and Internet of Things. Diverse product offerings for different customer segments, driven by Intelligent Analytics based on big data, will distinguish banking services in the near future.
