Govt Seeks Action Plans from PSBs to Clear Re-KYC Backlog

All major public sector banks (PSBs) have been directed by the finance ministry to submit their action plans by end of the month for completing the pending re-know your customer (re-KYC/e-KYC), as Business Standard reported.

"The government also directed lead banks to coordinate with gram panchayats to mobilise people for completing the re-KYC process. Moreover, the finance ministry has instructed senior management of banks to set up dashboards for regular monitoring of pending re-KYC cases and conduct regular reviews with field staff," Business Standard quoted a senior government official familiar with the matter.

The official also stated that the banks should facilitate re-KYC through any branch and not to be restricted to the base branch.

The order came during the meeting chaired by M. Nagaraju, secretary at DFS, with all stakeholders for carrying out fresh re-KYC process for the Pradhan Mantri Jan Dhan Yojana (PMJDY) account holders. Between the period of August 2014 and December 2014, around 10.5 crore PMJDY accounts were opened. The periodic updating of these PMJDY accounts are due after a decade now.

As the centre is taking pro-active measures to streamline the government machineries and services. With a prominent 11 per cent year-on-year growth result in the first half of FY 2024-25, the PSBs underlined its scope of growth potential and to enhance its efficiency, the government is not only emphasising on regulatory measures like the re-KYC process but also coming up with incentive schemes like the revised-PLI for value creation and encourage employees to adopt a result-oriented approach.

Govt Introduces Revised-PLI for Value Creation

Recently, ministry's department of financial services (DFS) had also unveiled a revised performance-linked incentive (PLI) scheme to lift the spirits of senior executives of PSBs in the role chief manager and above. With this PLI, the government seeks to reward and motivate employees for significant value creation for various stakeholders. In a circular, the ministry said that the scheme will be effective from the financial year 2023-24.

Notably, previous PLI scheme was restricted only to Whole-Time Directors (WTDs) – managing directors & chief executive officers and executive directors. With the revised guidelines, the government aims to address the compensation disparity between senior executives of PSBs and private sector banks (PvSBs).

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The banks need to meet at least three out of four criteria in order to be eligible for the PLI scheme. These include positive return on assets (RoA) and cost to income ratio (CIR). Moreover, Banks’ performance will be evaluated based on an evaluation matrix comprising four equally-weighted evaluation parameters – efficiency, business, asset quality and Financial Inclusion (including Enhanced Access and Service Excellence reforms).

As per the circular, PLI for MD & CEOs and EDs of nationalised banks and Chairman, MDs and DMDs of State Bank of India has been pegged at 100 per cent of their annual basic pay. Likewise, for SEs in the rank of chief general manager and general manager; and deputy general manager and assistant general manager it could be up to 90 per cent and 80 per cent, respectively. PLI for chief manger, is pegged at 70 per cent. The PLI will be paid in cash in a single tranche.

Performance of The PSBs

The aggregate business of the country's PSBs stood at Rs. 236.04 lakh crore showcasing a 11 per cent year-on-year growth, during the first half of FY 2024-25, as per PIB. During the period, net profit also grew 25.6 per cent annually and stood at Rs 85, 520 crore.

While Global credit portfolio grew by 12.9 per cent and stood at Rs 102.29 lakh crore, global deposit also accounted over 133 lakh crore with a 9.5 per cent year-on-year growth. Gross and Net Non-Performing Asset declined by 108 bps and 34 bps respectively as compared to the last year.

Meanwhile, PSBs have also made big strides in using technologies like AI, cloud computing, and blockchain. Simultaneously, the banks are also preparing itself for the challenges that come along technological advancement and upgrading their existing digital infrastructure to not only tackle cyber crime but also to provide high-quality customer service.