Discuss how the 4Rs strategy and EASE Reforms Agenda have reshaped the Indian banking sector. What challenges remain?

Q. Discuss how the 4Rs strategy and EASE Reforms Agenda have reshaped the Indian banking sector. What challenges remain? (15 marks, 250 words)

The Asset Quality Review of 2015 exposed a hidden stress mountain — gross NPAs of PSBs peaked near 15% by March 2018. The Government's 4Rs strategy and EASE Agenda have since restructured public banks into a record ₹1.98 lakh crore net profit in FY 2025–26 [1].

4Rs — cleaning the balance sheet - Recognition: transparent AQR reclassified stressed loans and forced full provisioning [2]. - Resolution: the IBC, 2016 with SARFAESI enabled time-bound recovery through NCLT [2]. - Recapitalisation: over ₹3.12 lakh crore infused, restoring lending capacity [2]. - Result: Gross NPA fell to 1.93%, Net NPA to 0.39% (FY26) — historic lows [1].

EASE Reforms — governance and efficiency - EASE 1.0 to EASE 8.0 (EASERise) institutionalised tech-driven, analytics-led, HR-reformed banking [3]. - Consolidation cut PSBs from 27 to 12, and all banks exited RBI's PCA framework [4]. - Healthier books fuel Retail/Agri/MSME credit — advances grew 15.7% [1].

Challenges remaining - Post-merger credit concentration and regional under-banking. - Limited board autonomy; dual pull of GoI ownership and RBI regulation. - Rising unsecured retail lending and cyber-fraud exposure. - Unresolved privatisation and sustained capital-raising debate.

The 4Rs and EASE together mark a genuine recognition-to-resurgence journey. Sustaining it demands professionalised boards, a prudent risk culture and deeper financial inclusion — aligning resilient PSBs with SDG-8's inclusive-growth mandate.

(~250 words)

Sources: 1. PSBs record all-time high net profit of ₹1.98 lakh crore in FY 2025–26 (PIB, 12 May 2026) — FY26 net profit, NPA ratios, advance growth 2. Steps under the 4R's strategy to reduce NPAs of PSBs (PIB) — 4Rs, AQR, IBC/SARFAESI resolution, ₹3.12 lakh crore recapitalisation 3. EASE 8.0 (EASERise) Reform Agenda advances transformation of PSBs (PIB) — EASE 1.0–8.0 reform evolution 4. Ministry of Finance Year Ender 2024: Department of Financial Services (PIB) — PSB consolidation 27→12, exit from RBI's PCA framework